We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards AerCap Holdings N.V. (NYSE:AER) and determine whether hedge funds skillfully traded this stock.
Is AerCap Holdings N.V. (NYSE:AER) a buy here? Investors who are in the know were turning less bullish. The number of long hedge fund bets retreated by 3 lately. AerCap Holdings N.V. (NYSE:AER) was in 42 hedge funds’ portfolios at the end of September. The all time high for this statistic is 77. Our calculations also showed that AER isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s go over the key hedge fund action regarding AerCap Holdings N.V. (NYSE:AER).
Michael Weinstock of Monarch Alternative Capital
Do Hedge Funds Think AER Is A Good Stock To Buy Now?
At Q3’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AER over the last 25 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in AerCap Holdings N.V. (NYSE:AER) was held by Eagle Capital Management, which reported holding $382.5 million worth of stock at the end of September. It was followed by Lyrical Asset Management with a $267.6 million position. Other investors bullish on the company included Empyrean Capital Partners, Basswood Capital, and Monarch Alternative Capital. In terms of the portfolio weights assigned to each position Monarch Alternative Capital allocated the biggest weight to AerCap Holdings N.V. (NYSE:AER), around 24.86% of its 13F portfolio. Six Columns Capital is also relatively very bullish on the stock, dishing out 10.86 percent of its 13F equity portfolio to AER.
Due to the fact that AerCap Holdings N.V. (NYSE:AER) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of hedgies that decided to sell off their positions entirely last quarter. It’s worth mentioning that Julian Robertson’s Tiger Management cut the largest position of the 750 funds tracked by Insider Monkey, totaling about $40.9 million in stock, and Suzi Nutton (CEO)’s Lansdowne Partners was right behind this move, as the fund dropped about $39.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to AerCap Holdings N.V. (NYSE:AER). These stocks are Kilroy Realty Corp (NYSE:KRC), Apartment Income REIT Corp. (NYSE:AIRC), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Advanced Drainage Systems Inc. (NYSE:WMS), Brooks Automation, Inc. (NASDAQ:BRKS), Americold Realty Trust (NYSE:COLD), and National Retail Properties, Inc. (NYSE:NNN). All of these stocks’ market caps are similar to AER’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRC | 24 | 422839 | -2 |
| AIRC | 17 | 270935 | 3 |
| LECO | 21 | 288792 | 1 |
| WMS | 21 | 1092988 | -5 |
| BRKS | 29 | 577566 | -3 |
| COLD | 15 | 93728 | -1 |
| NNN | 21 | 120081 | 2 |
| Average | 21.1 | 409561 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $410 million. That figure was $1449 million in AER’s case. Brooks Automation, Inc. (NASDAQ:BRKS) is the most popular stock in this table. On the other hand Americold Realty Trust (NYSE:COLD) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks AerCap Holdings N.V. (NYSE:AER) is more popular among hedge funds. Our overall hedge fund sentiment score for AER is 68.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on AER as the stock returned 9% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Aercap Holdings N.v. (NYSE:AER)
Follow Aercap Holdings N.v. (NYSE:AER)
Suggested Articles:
- 10 Best High Dividend Stocks to Buy
- 12 Biggest Pesticide Companies In The World
- 10 Healthy and Sustainable Food Stocks to Buy
Disclosure: None. This article was originally published at Insider Monkey.
